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2Q server sales sluggish
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August 3, 2001: 1:12 p.m. ET
Survey shows only modest rise in unit shipments; Compaq, Dell, IBM lead
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NEW YORK (CNNfn) - Sales of network servers continued to be hurt by global economic weakness in the second quarter as large corporations cut back or deferred purchases of the high-powered machines, according to the most recent data from technology research firm Gartner Dataquest.
Global shipments of servers – large computer systems that are used for everything from hosting Web sites to executing bank transactions – totaled 973,784 in the second quarter, a fraction of a percent higher than the 966,779 systems shipped during the same quarter last year.
Compaq (CPQ: Research, Estimates) shipped the most servers during the quarter, garnering a 26.7 percent share of the global market. Dell Computer (DELL: Research, Estimates) ranked second, with an 18 percent share of the market. IBM (IBM: Research, Estimates) was third, with 16.7 percent, the Dataquest report said.
The data also show that Dell and IBM were the only two companies that posted year-to-year server shipment increases. Dell's shipments were up a sharp 28 percent, while IBM's rose 10.4 percent.
Sun Microsystems (SUNW: down $0.66 to $17.51, Research, Estimates) was hit hardest by the slowdown. Its server shipments in the second quarter fell 15 percent from a year earlier. Hewlett-Packard's shipments fell 10 percent. Compaq shipped 4.9 percent fewer servers in the quarter than it did during the year-ago period.
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IBM's recent aggressive attacks on HP and Sun customers began to bear fruit for the company, while HP's continuing channel conflicts may have helped IBM's attacks become more successful.
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Jeffrey Hewitt
Gartner Dataquest |
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Sun is a top supplier of the servers used to run Web sites, and in recent years it posted solid growth, especially in 2000 amid the dot.com euphoria that swept the industry.
However, the company has lost much of its momentum now that the dot.com bubble has burst and it faces a much softer market as weakening economic conditions spread beyond the U.S. into other regions, according to Dataquest. On top of all that, Sun has been facing increasing competition and a difficult transition to new products based on its newest processor, called UltraSPARC III, analysts said.
"Sun's UltraSPARC III issues and current poor reputation for service and support hastened its decline, and this shows that its incredible momentum from 2000 has dissolved for now," Dataquest analyst Jeffrey Hewitt said in the report.
For its part, IBM's aggressive server efforts, which are taking aim specifically at Sun and HP's core markets, have shown signs of progress, according to Hewitt.
"IBM's recent aggressive attacks on HP and Sun customers began to bear fruit for the company, while HP's continuing channel conflicts may have helped IBM's attacks become more successful," he said.
HP rolled out its flagship server product, called SuperDome, last September. However, the company has reported lackluster sales of the new products, which executives have blamed on a combination of economic weakness and internal execution problems. 
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